Tech community must win the Tech Transfer numbers game

In prior columns, I have expressed my appreciation for the level and sophistication of technology I have encountered during my first few months in the Inland Northwest.

Patrick Tam
Special to The Spokesman-Review

Once I began to examine outside funding of the region’s research institutions, I realized that nobody should be surprised.

Did you know that between Pacific Northwest National Laboratory (PNNL), Washington State University and the University of Idaho, awards from various federal sources amounted to nearly $700 million last year? Add in state grants to the two universities and the same mix to the region’s small colleges, universities and medical sites, and the sum easily exceeded $750 million. True, a percentage of these public dollars does not engage the discipline of science and technology. But the majority does.

These are large numbers. So the challenge I have now put to SIRTI staff is how we help convert those hundreds of millions of dollars coming to the Inland Northwest each year into commercial activity — based here. All three of the region’s major research institutions have offices dedicated to recover a return on these dollars. But all three, in one form or another, have begun discussions with SIRTI for our collaboration to secure higher returns. They, like I, feel that we all can do better.

At the center of this effort is another transfer, a movement of commercially viable ideas out of the laboratories into the marketplace. This is generally known as technology transfer. As our regional leaders move toward technology-led economic development, it serves us well to understand technology transfer. While SIRTI is not involved in conducting research to generate the technologies, we are deeply involved in the commercialization of these innovations.

What is at stake? Consider the University of Wisconsin-Madison, long held up as the grandfather of university technology transfer. In 1925, a discovery by a faculty member on how to synthesize vitamin D and keep it stabilized in food led to the formation of the Wisconsin Alumni Research Foundation (WARF). The goal of professor Steenbock and university administrators at that time was to find a mechanism to ensure that revenues from that discovery would flow back to the university. This farsighted group succeeded admirably, starting with its first license to the Kellogg Company. At present, the WARF manages an endowment of more than $1 billion and gives $30 million a year in grants to university faculty. And along the way, rickets has disappeared as a debilitating children’s disease.

More than 200 universities now embrace the WARF model, from my alma mater of MIT to most every state institution with a significant research effort. The most successful programs deliver sums even larger than those of the WARF. Columbia University, for example, receives $90 million of income from its patents per year. More meaningful numbers come from peer institutions to our universities: Michigan State University at $30 million a year, North Carolina State University at $7 million a year, or Purdue at $2.4 million a year.

How does the Inland Northwest stack up? Compared to other Department of Energy-funding national laboratories, PNNL scores well in launching new products. And the technology transfer efforts of the two Palouse universities score fairly well versus their peer, land-grant institutions, when results are set against the amount of extramural funding they receive. For example, the number of WSU invention disclosures and patents/funding dollars received is very much in line with its peer universities. Yet, the amount of royalties received and of firms created per funding dollar is low.

Before our region enthusiastically embraces a technology-led growth strategy, we should bear in mind that this path, while promising, requires us to think long-term. Many steps separate research from revenue. Consider the typical chain of events that accompany an inventor’s successful odyssey within a large research organization: a proposal to the relevant funding agency, receipt of that funding, research, invention, disclosure of that invention to the technology transfer office, evaluation of the market of the invention, investment into protecting the intellectual property of the invention, licensing or business formation, finally, returns from the licenses or business created by the intervention. The odyssey lasts years, often a decade. And at nearly every stage, something can go wrong. As students of probability know, the odds of success for multi-staged events are multiplicative, not additive. In a word, the rate of success is low, just as in venture capital investments.

This is why it is vital that community and elected leadership rally around funding for higher education and other major R&D institutions. Technology-led growth is, at a fundamental level, a numbers game. The greater amount of funds that support research, either basic or applied, the greater number of useful inventions, and ultimately the higher the commercial potential of the region.

By the same token, all players in regional technology transfer should try to raise the probability of success at each link in the chain. Certainly, we are attempting this at SIRTI. Current thinking among university technology transfer officers now holds commercialization as the Achilles heel of the process. In other words, many good to great inventions are gathering dust for a variety of reasons, ranging from a shallow understanding of markets, to management difficulties, to an absence of commercial funding.

It is at this link, or set of links, in the chain of events from research to revenue where SIRTI is spending much of its energies. I have taken pains to rebuild a staff skilled in both business and technology. For example, our associate director, Nigel Davey, combines a strong knowledge of key technology areas with a career as successful CEO of several high technology businesses, ranging from small to one with sales of $250 million.

Too many good ideas from Moscow, Pullman and the Tri-Cities have gone begging for lack of a hospitable, commercial environment. Washington state leads the nation in firm creation, but also in firm closings. At the moment, efforts are afoot in the state to create a better environment for emerging technology businesses. These are welcome initiatives.

Whatever their outcomes, rest assured that SIRTI remains focused on its mission and core competence — assisting technology companies to come to life and find the right path for growth and success.

•Patrick Tam is executive director of the Spokane Intercollegiate Research and Technology Institute

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